Podcast
Questions and Answers
Which accounting method recognizes revenues when cash is received and expenses when cash is paid?
Which accounting method recognizes revenues when cash is received and expenses when cash is paid?
- Accrual Basis Accounting
- Tax Depreciation Accounting
- Cash Basis Accounting (correct)
- Capital Gain Accounting
In a tax-deferred exchange, what term refers to the cash or non-like-kind property received?
In a tax-deferred exchange, what term refers to the cash or non-like-kind property received?
- Boot (correct)
- Capital Gain
- Active Income
- Basis
A business using cash basis accounting would recognize revenue when:
A business using cash basis accounting would recognize revenue when:
- Cash is received from the customer. (correct)
- Services are performed, regardless of when payment is received.
- An invoice is sent to the customer.
- A contract is signed with the customer.
What is the primary difference between cash basis and accrual basis accounting?
What is the primary difference between cash basis and accrual basis accounting?
Which of the following scenarios would trigger recognition of 'boot' in a tax-deferred exchange?
Which of the following scenarios would trigger recognition of 'boot' in a tax-deferred exchange?
A company using cash basis accounting purchases supplies on credit in December but pays for them in January. When will the expense be recognized?
A company using cash basis accounting purchases supplies on credit in December but pays for them in January. When will the expense be recognized?
What is the potential consequence of receiving boot in a tax-deferred exchange?
What is the potential consequence of receiving boot in a tax-deferred exchange?
Which of the following is NOT a key characteristic of cash basis accounting?
Which of the following is NOT a key characteristic of cash basis accounting?
In a tax-deferred exchange, what happens to the unrecognized gain when boot is received?
In a tax-deferred exchange, what happens to the unrecognized gain when boot is received?
Which type of business is MOST likely to use cash basis accounting?
Which type of business is MOST likely to use cash basis accounting?
Flashcards
Basis (Cash Basis Accounting)
Basis (Cash Basis Accounting)
An accounting method that recognizes revenues and expenses when physical cash changes hands.
Boot
Boot
Cash or property received in a tax-deferred exchange that does not qualify for tax-free treatment.
Study Notes
- The major accounting method that recognizes revenues and expenses when physical cash is received or paid out is known as basis.
- Cash received in a tax-deferred exchange is known as boot.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Understanding cash basis accounting, where revenue and expenses are recognized upon cash receipt or payment. Also, defining 'boot' in tax-deferred exchanges as cash received. These concepts are fundamental in financial accounting and tax planning.
